A Texas Non-Compete Agreement is a legal contract that employers use to prevent former employees from working with competitors or starting a competing business. These agreements are often implemented to protect the employer’s trade secrets, confidential information, and customer relationships.
In Texas, non-compete agreements are enforceable if they meet specific requirements, such as being reasonable in scope and duration. Both employers and employees need to understand the terms of these agreements before signing them.
Reasonable Uses and Objections
- Enforceable when terminated without cause? – Yes.
- Employee non-solicitation agreement permitted? – Yes.
- Customer non-solicitation agreements permitted? – Yes.
- Does continuing employment equal sufficient consideration? – No.
- Statute of Limitations for breach of contract: 4 years.
Legally Enforceable in Texas?
Yes, non-compete agreements are legally enforceable in Texas if they comply with the state laws.
Texas Business and Commercial Code § 15.50 governs the making of non-compete agreements. It provides that correctly drawn non-compete agreements that comply with the statute’s terms can be enforced.
Time Limitations
Texas Business and Commercial Code section 15.50 (a) requires that non-compete agreements must have a clearly defined limit of time, which is reasonable.
Geographical Limitations
The Texas statute also requires that non-compete agreements must have a clearly defined limitation of geographical area.
Other Limitations
Business laws apply to all non-compete agreements. All non-compete agreements must be ancillary or a part of some other agreement that is otherwise enforceable, such as a business purchase agreement. According to the Texas Business and Commercial Code terms, a stand-alone non-compete agreement does not appear to be permitted.
Special limitations apply to non-compete agreements covering physicians in Texas. To be enforceable in Texas, in addition to the other requirements for a non-compete agreement, a non-compete agreement covering a physician must provide:
- The physician must be allowed to have access to the list of patients that he has seen or treated within one year prior to the termination of the employment contract;
- The physician must be allowed to have access to the medical records of the physician’s patients upon authorization and must be allowed to copy the medical records, subject to a reasonable fee;
- The agreement for access to the records must not require the records be kept or delivered in a format other than the one in which the records are usually maintained, except by mutual consent of the parties;
- The agreement must provide for a buy-out provision at a mutually agreeable price or, if the parties cannot agree, must provide for an arbitrator or court determination of a reasonable price;
- The agreement must provide that the physician may continue to treat specific patients during the course of acute illness, even after the termination of employment.
Sample
Below, you can download a Texas non-compete agreement in PDF and Word format:
